The effect of the government’s proposed rice policy will basically ‘shut us down’, says Greg Worthington-Eyre, CEO of the country’s main rice importer and producer, Trukai Industries. His warning follows a prediction of price rises by the Independent Consumer and Competition Commission, and a warning by the Australian government the policy could breach WTO rules.

Sometimes all the hallmarks of an impending disaster are plain to see. The course of action has been charted and the engine is running at full steam, but a myriad of obstacles both big and small cover the tracks. Is there anything that can stop the train before it is too late?

In this case the proverbial train is PNG’s proposed rice policy which aims to make the country’s rice production self-sufficient by 2030. This is no small task. However, it seems that the PNG government is determined to press ahead.

Exports to one of Australia's biggest rice markets are at risk because of a change of government policy in Papua New Guinea. More than three-quarters of the rice consumed in PNG is imported from or sourced by Australia. But the PNG Government's new rice policy will give 80 per cent of the import market to what it is calling 'pioneer investors' willing to develop a domestic rice industry.

22nd August – APNGBC issued a statement to address the issue following a request for comment from The National Newspaper as follows.

“The Australia Papua New Guinea Business Council is deeply concerned at any suggestion that the Papua New Guinea Government would take any action which would be contrary to its commitments under international trade and investment agreements. These include not only the Agreement between Australia – Papua New Guinea for the Promotion and Protection of Investments, but also its multilateral commitments under APEC and the World Trade Organisation. Australian companies have invested more than AUD19bn In Papua New Guinea’s economic development knowing that these investments are protected by guarantees provided under these bilateral and multilateral treaties. Papua New Guinea’s global reputation as a secure place for foreign investment depends on its observance of its obligations and in the equitable treatment of foreign investors. With Papua New Guinea due to host the APEC Leaders’ Meeting in Port Moresby in 2018 it would send a very negative message to those countries and beyond if Papua New Guinea proceeds with plans to effectively and arbitrarily expropriate the business of a major foreign investor. The Council urges the Papua New Guinea Government to draw back from the proposed action which will damage its international investment reputation.”

22nd August - The National reported that the Australian government has expressed very serious concerns over the new PNG Rice Policy to provide import quotas for rice importers in PNG. (It is understood that 80% quota will be imposed). We understand that a new company-Naime Agro Industry will take up the 80 percent with the balance for traditional importers. In light of this development, Australian Trade Minister Steven Ciobo claims the proposed rice policy will amount to unilateral expropriation of an Australia Investment (Trukai Rice) and may breach several provisions of the Australia – Papua New Guinea for the Promotion and Protection of Investments (IPPA) including Papua New Guinea’s obligation to provide fair and equitable treatment to Australia investors; a prohibition of indirect expropriation without proper adequate and effective compensation; and prohibition of an arbitrary, unreasonable or discriminatory measure.

All the above was contained in a letter Minister Ciobo wrote to his PNG counterpart Richard Maru who said he will take the matter to the attention of the Prime Minister. (Minister Maru) is yet to respond.

Sydney Morning Herald reported Australian rice growers could lose thousands of tonnes in sales - equal to almost a third of their revenues - if a plan by the Papua New Guinea government to launch quotas aimed at fostering a local rice industry goes ahead.

The Australian rice industry has built up a PNG business which accounts for $364 million of its $1.27 billion total revenue through a local unit, Trukai. Via SunRice, Australian rice growers own two thirds of Trukai, with the balance held by a PNG super fund.